GH¢1 Fuel Levy: It’s not new, just a fix for power sector’s liquidity crisis - Kwabena Donkor

Former Power Minister Dr. Kwabena Donkor has defended the GH¢1 levy on petroleum products. This levy was passed by Parliament on June 3.

Dr. Donkor claims it is not a new tax. He says it adjusts an existing one to help Ghana’s struggling power sector.

“This is not a new levy,” he told Evans Mensah on Joy News’ PM Express on June 4. “The government is just adding to the quantum.”

The GH¢1 increase comes from the Energy Sector Levy (Amendment) Bill, 2025. This bill aims to raise revenue for Ghana’s energy sector debt and ensure reliable electricity supply.

Dr. Donkor emphasized that this intervention is crucial. “The power sector has faced liquidity challenges for years,” he said. “We are under-recovering costs, which leads to debt.”

He noted that problems in the power sector persist despite previous interventions. “As we speak, we are still under-recovering,” he stated.

“The situation has not changed, and debt continues to pile up.”

Dr. Donkor believes addressing this issue requires more than just raising revenue. “We need a two-pronged approach,” he explained.

“First, increase revenue for legacy debt; second, reduce costs in the power sector.” He stressed that efficiency must improve to at least break even.

Without a broader plan, Dr. Donkor warned that debt will keep rising despite new revenue measures.

“If we don’t act, we’ll keep adding to the debt,” he said. The figure was $3.1 billion as of March and will continue growing.

He insisted that people should understand where the GH¢1 goes: “It’s going to a sector that desperately needs liquidity.”

While acknowledging public frustration over higher fuel prices, he stressed stable electricity requires proper funding.

“You want lights on? You have to fix the system,” he said.

Critics argue about government transparency with past energy levies like ESLA. However, Dr. Donkor maintains this levy is necessary if accompanied by structural reforms.

“Raising money is only half the job,” he warned. “Efficiency and cost control are equally important.”

He concluded that discussions should focus on running the power sector with discipline rather than whether or not to pay more.

“We’ve had enough short-term fixes; let’s ensure this one contributes to a comprehensive solution.”